By Tiernan Ray

Jefferies & Co.’s Peter Misek today offers up the findings of his quarterly survey of the smartphone, tablet and PC markets, writing that Apple‘s (AAPL) sales of the iPhone are slowing, that Samsung Electronics‘s (005930KS) sales of its Galaxy S4 are about as expected, that sales of BlackBerry‘s (BBRY) Q10 handset are doing better than expected, and that sales of “white box,” off-brand smartphones and tablets “continue explosive growth.”

Misek’s survey inquired about sales of the top models of smartphone and tablet, customer interest by brand, customer satisfaction, and was posed by telephone to retailers and carriers in the U.S., U.K., France and Germany, with half the participants in the U.S. He does not discuss the sample size, telling me in a note that “It is not by individual store but rather entire chain or region,” and “by actual carrier or an anonymous basis.”

His overall impression seems to be that prices are coming down, according to respondents’ views, and that volume shipment expectations are coming down:

Survey participants’ optimism on pricing (i.e. belief that smartphone pricing will come down) remains quite high at 58%, we believe optimism is likely to increase in coming quarters as we expect white-box devices to infiltrate developed markets. Volume optimism dropped significantly from 68% in the previous survey to 48%. Samsung now eclipses Apple in our surveyed countries for the first time and is taking share.

Misek offers the following graphic showing what he believes is the overall smartphone shift to lower-priced models (click for larger image):

For Apple, Misek sees the current quarter sell-through of the iPhone trending down from Q1′s level:

Misek thinks Apple will build 25 million to 30 million of the rumored lower-cost iPhone will be built for the December quarter, about half the 60 million to 65 million iPhone units in total he thinks Apple is building, according to his channel checks.

We believe iPad mini builds are 15M-20M (Jun Q), 25M-30M (Sep Q), and 35M-40M (Dec Q). Our prior check indicated total iPad builds of 20M-25M (Jun Q), indicating a large majority of production is for iPad mini. We expect an Oct launch for the full-size iPad, iPad mini, and lowered prices on the original iPad mini. We expect the “iPad 5” to be around half the weight and 30% to 40% thinner. We believe iPad mini 2 will have retina display. We believe the original iPad mini will be kept and the price points will be lowered by $50 to $100.

For Samsung, Misek’s colleague Sandeep Bajikar, who rates the stock a Buy, with a ₩2,100,000 price target, writes that the company is providing a “compelling alternative” to the iPhone, and “Together with Samsung’s manufacturing cost advantage and Best Buy presence, we expect Samsung’s ecosystem advantage to translate into share gains of Smartphone profits.” The company is providing “Smart-Switch” software to make it easy for iPhone users to switch, he notes.

Those qualities, writes Misek, are helping the Galaxy S4 sell “in line with aggressive projections … builds were for 70M to 80M,” while the company may sell 70 million to 80 million smartphones per quarter this year “as low-end volumes explode” for cheaper handsets.

Misek cites data from his colleague Cynthia Meng who had conversations with management of China-based carriers China Telecom (CHA) and China Unicom (CHU), and notes the appeal of Samsung models versus the iPhone, especially with the lower subsidy cost they have to endure:

The handset subsidies to CDMA service revenue ratio was 28% in 1Q13 and mgmt guided 24% for FY13E, +60 basis points YoY. CT (China Telecom) is already seeing a decline in Apr/May mainly due to the introduction of high-end Samsung smartphones (e.g. Galaxy S4) that have a lower subsidies-to-sales ratio compared to iPhone. Samsung’s smartphone features including large screen and dual mode dual SIM have led to increasing popularity amongst users vs. iPhone. Mid-end dual mode dual SIM handsets (priced at approx. RMB2K/handset) prove to be popular […] Similar to China Telecom, CU is seeing increasing popularity of Samsung vs. iPhone amongst users and competition in mid-range smartphones is very severe.

For BlackBerry, Misek notes sales of the Z10 handset have tapered off since their debut in February, but the Q10 is proving a better seller, and that sales remain strong in markets outside the U.S., U.K., and Canada:

Sales of Z10 in consumer markets have slowed, some businesses still evaluating; Q10 launch in our view has been better than Z10 and better than expected; Sales of BB10 outside of US, UK, and Canada very strong.

The Q10 may help BlackBerry beat Street expectations for total sales of BB10-based devices both in the quarter that ended last month and in the August quarter, writes Misek: “We believe 3M+ BB10 devices in the May quarter, Street is ~3M; 3M+ expected for August quarter. We believe it may be materially higher.”

Misek notes that BlackBerry’s production, according to his checks, have risen lately for the first time in a month, which could be attributable to the forthcoming lower-priced “Q5” handset, due this summer, although he offers it could also be attributable to higher-than-expected Q10 demand.

Misek notes that sales of the older BB7 handsets are “decelerating more than expected,” which he thinks would be positive for BlackBerry’s profit margin, as the company has been losing money on each unit.

Lastly, Misek notes that AT&T (T) and Verizon Communications (VZ) appear to be set to bring low-cost, no-name-brand smartphones to the U.S.:

We believe AT&T and Verizon are in discussions with Chinese white-box OEMs to bring carrier-branded smartphones to the U.S. market. We believe the introduction of low-cost smartphones to the major U.S. carriers could lead to major subsidy cuts. We believe tablet growth has been almost all from white-box tablets and as a result raise our 2013 estimates to 100M units.

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There are 35 comments

JUNE 7, 2013 1:19 P.M.

Ed wrote:

Fire Cook

JUNE 7, 2013 1:23 P.M.

Larry wrote:

Got to love how Goldman Sachs F'ed
everyone again with their " Buy the 450
Calls ahead of the conference " BS call
last week. You bought they shorted, they
made millions and you are bankrupt. GS
King of the Con Artists

JUNE 7, 2013 1:29 P.M.

BD wrote:

Coming over from iPhone, I love my Z10...although, I will be trading it in in December for the A10, that's gonna be a beast :)

JUNE 7, 2013 1:31 P.M.

A Pull wrote:

The long awaited commodification of the smart phone has finally started. Bad news for the established players.

JUNE 7, 2013 1:34 P.M.

freddysrevng wrote:

" iPad minis are cannibalizing more than expected."

Question: How incredibly Wrong was Steve Jobs on a "7 inch form factored tablet"?

I own a BlackBerry Playbook and an iPad Mini and would never think to purchase a larger, hotter running iPad.

Q10

JUNE 7, 2013 1:35 P.M.

Marc wrote:

Geeze, Larry.... If they do it that often, you'd have figure out to do the opposite of what they say and you'd be raking in the bucks too!

JUNE 7, 2013 1:37 P.M.

plentyofroominthemarketplace wrote:

The carriers are likely getting behind the Firefox OS. The Firefox OS has the most chance of taking market share away from Android. With Samsung the face of Android, other manufacturers will try to differentiate themselves. Carriers will have less restrictions to customize also.

JUNE 7, 2013 1:39 P.M.

Anonymous wrote:

dart throwing monkey

JUNE 7, 2013 1:42 P.M.

freddysrevng wrote:

So, on the one hand, you have Samsung eating Apple's lunch in the "Toy Smartphone Arena" with the launch of the S4.

On the other hand, with regards to, the 2 Main areas that people think Apple should be concentrating ie "Larger Screened Phone" and "Less Expensive Phone" - you will have BlackBerry BEAT Apple to the punch in emerging markets with the Q5 and in the "Superphone Arena" with the Aristo aka the A10 aka "The One".

Oh, and lest we forget - the BlackBerry Q10 will be the "Most Successful Launch of a BlackBerry Product in Years" in the Good Old U.S.A........

My "channel checks" at ATT, VZ and TMobile have all confirmed that while there was "minimal interest" going into the Z10 launch - the story is quite the opposite for the Q10 launch and each of these carriers has "lists of businesses and individuals on HOLD to purchase a Q10".

Blackberry has hired an experience US federal prosecutor Steve Zipperstein as its new Chief lawyer. So I guess the lying analysts who like to feed stuff to Barrons better watch their back. Article is on Bloomberg. This is not a defensive move. BBRY is going on offense.

JUNE 7, 2013 2:16 P.M.

NoBrainer wrote:

This was bound to happen. Apple doesn't offer anything uinque with iPhone. Except ecosystem, there is no other significant advantage in over paying for iPhone. IThe problem is that most of these white box devices are built on Android which has even better app selection. Blackberry, on the other hand is a unique product with best device management, security, and keyboard. Blackberry is going to be a big come back story.

JUNE 7, 2013 2:16 P.M.

freddysrevng wrote:

I LOOOOOOOOVE my playbook! How right was RIMM to introduce to the world a mini tablet to the world when crapple had sold millions of that huge, ugly fat-ass iPad?

Steve Jobs was no visionary. He said that the small tablet would never sell.

Fast forward a few years and look how WRONG he was. Everywhere I go I see nothing but BBRY Playbooks!
Can't wait to buy the new Playbook when it comes out.

---freddy

pimping
BBecause I need the price per share to go above the $124 price that I paid.

Apple notoriously makes one phone. Correct. And that won't change. As for the trade in. Consider it geo politically. After that. You go into the store and swap your old iPhone or whatever for the newest model. Can anyone beat that?! I don't think so. Certainly not BlackBerry or Best Buy.

Me thinks Apple will continue...

JUNE 7, 2013 2:41 P.M.

freddsyrevng wrote:

Welcome Steve Zipperstein to BlackBerry.

All of us at GNAA are behind you. Call us.

JUNE 7, 2013 2:48 P.M.

Bob wrote:

Apple wants people to trade-in their old iPhone at an Apple store so they can destroy it. They want you to buy up for a new one instead of picking up a used one on eBay or elsewhere. So Apple needs to get rid of the used phones to boost new sales.

JUNE 7, 2013 3:10 P.M.

Pete wrote:

"One of Zipperstein's targets: Detwiler Fenton & Co., a Boston-based financial-services firm. Detwiler said in an April report that return rates of the new BlackBerry Z10 were unusually high and in some cases exceeded sales of the phone." - Bloomberg

JUNE 7, 2013 3:55 P.M.

James wrote:

DoD has 63000 iOS machines in active service. DoD plans to expand its mobile machines to 6 million units. Apple could very well become DoD's major supplier. The Texas Apple plant is a humble beginning expected to manufacture highly secretive DoD gears and services for very high profits. Apple's strength is its integration and application platform, both state of the art in robustness, maturity, stability, technical advances such as the Siri artificial intelligence. With Apple being the nation's top military supplier, hundreds of billions $ plus special privilege would anchor Apple's long term prosperity and stable growth. The Texas plant will produce the world's most advanced iOS gears. As DoD embraces the iOS ecosystem, there will be many strategic projects on the iOS platform and framework guaranteed to turn iOS into the world's top premium technology and application option, replacing the ageing government, public, commercial, and business systems and equipments.

JUNE 7, 2013 4:34 P.M.

Michael wrote:

James, the number of IOS devices the DOD has is 41,000. My source is the DOD's own press release. BTW, there are 470,000 Blackberry devices. These would be the old BB devices which they obviously still prefer even to the best Apple can make, even after 6 years of the iPhone being available.

JUNE 7, 2013 4:51 P.M.

misledbyfools wrote:

The low end of the market is just that. Now Samsung will be squeezed by the Chinese. A billion new smart phones from white boxes.....enter the disposable phone as they will not be worth fixing if defective. Like most Chinese products, the batteries and the devices themselves will not last very well. With the average replacement time cycle for smart phones being around a year, this new junk will shorten that time cycle considerably. Premium products will still be better and cost more, but there will be price pressure on sales as people buy older technology for really low prices. The atv market springs to mind as Honda etc. make an atv to last but the Chinese have flooded the market with cheap toys that wear out and lack engineering refinements and quality. The smart phone will be the same unless we as consumers realize that buying that cheap Chinese product actually lowers our standard of living. The smart phone market is maturing and here comes the giant copy cats. Look out Samsung. I for one would not use a Chinese or any foreign phone for that matter as I want to support our people, here at home as much as I can. A least some jobs are still local. Also, I think that our governments and trade commissions should protect our patents and take a more aggressive approach to deal with these infringements on a global scale. I know that our companies are not afforded the same protections in China as we afford their government sponsored companies here. It is just ridiculous, but someone is getting paid to look the other way. When will we as a people wise up to the fact that our companies don't stand a chance in this environment. China is buying US debt with funds that they print without anyone being able to verify exactly or even roughly the amount that they are printing. This is a huge problem for the free and open developed countries of the world. I do not trust them at all.

What is about to happen to the smartphone market in the US is just a repeat of so many industries already. Just say no to China.

JUNE 7, 2013 7:33 P.M.

Kris wrote:

Android not so secure. Major draw back. this is in today. http://bit.ly/11538ZV and http://bit.ly/11xOBZA Samsung makes good product but this is very concerning about android platform. at-least ios is not this bad. people hate sudden change but security will be important specially when future of money transaction is in mobile hand set's hands. but no one will agree until they get attacked. once they do get hit with malware and loss of personal info the perception will change very quickly. majority have invested in apple and android based companies, therefore they are defending it but very soon, realty will kick in. just imagine, some one hacking one's broker log-in and dumping everything you have in account or buying garbage, when you complain, it will show that it was your handset and you your self executed the trade?

JUNE 8, 2013 12:10 A.M.

Ozzy wrote:

So Zipperstein worked as counsel for Verizon, Verizon refuted Detwanker's (Detweiler) claim on Blackberry Z10 returns. Blackberry hires Zipperstein as chief legal officer. Does anybody else see a pattern here? I see a joint effort by VZ and BBRY, I hear APPL has or wants VZ, Sprint, and ATT by the n*ts. VZ CEO says he wants no part of this, he stated recently he would favor a third or fourth (in this case I suppose NOK and MSFT) platform and will be good for business. I see VZ as THE provider that will market BBRY the most and will make the best effort to achieve its independence from APPL. VZ will bring success to BBRY, and BBRY in return will bring VZ less dependency on AAPL for future success. VZ & BBRY LONG AND STRONG!!

JUNE 8, 2013 7:04 A.M.

@ Ozzy wrote:

"Does anybody see a pattern here?"

Yes! You're hopeless.

JUNE 8, 2013 7:06 A.M.

Anonymous wrote:

BBRY will never ever see $20. Never. Not a chance.

JUNE 8, 2013 4:14 P.M.

berrygood wrote:

In your dreams , anony.

JUNE 8, 2013 10:44 P.M.

misledbyfools wrote:

All BBRY has to do is keep earning a $.25 to $.50 profit and its stock with take off and the shorts will get beaten badlly. Can they do it this quarter? I would be very pleased if they make a little profit and I think the market would be too. If they can control their costs, they can do it. Revenue growth this quarter will be 20% and this will help them. At some point, after the company doesn't loose money for a few more quarters and the momentum builds, confidence will come back to the stock. The mobile market is very dynamic and always a struggle for these companies.

BlackBerry doesn't intend on being in the hardware business, this is just window dressing and a bridge in their transition to a service provider, it has been touched on many times but unfortunately people can't see past the chatter. Don't be fooled and wake up stupid blackberry is on the rise

JUNE 10, 2013 3:34 A.M.

@ wake up wrote:

There's a capital idea. Maybe you noticed. Re the Z10 and Q10. The forum Crackberry dot com has a lot of negativity and lack of zealous enthusiasm. Not good. Reflects badly. Prophetically too. Tremendous cultural resistance me thinks. A solution it is without. Over and out.

Service shmervice. Eh. Bets.

JUNE 12, 2013 7:07 P.M.

BBRY wrote:

Hello Tiernan,
Re:BBRY
You might want to research the New Institutional Investor in Blackberry: ATL based in Spain. Many of their partners have a Morgan Stanley connection. Who are they buying shares for? 44.2 Million shares to date in a matter of weeks. What do they know and what should US media start looking into instead of peddling old stories. Who in the financial press will get the real story first?

Nary a word from the proverbially in your face prognosticating analyst. Hmm. Nary a word. What gives. Me thinks. After Apple's developer conference and iOS7... Not so good for Blackberry. As for Apple: Lookin good. Lookin good.

JUNE 28, 2013 8:09 P.M.

Matthew wrote:

Well, if Misek was as wrong about AAPL as he was about BBRY, look for a 25% gain in AAPL in one day anytime soon!

JUNE 7, 2014 5:31 P.M.

Eugenio wrote:

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About Tech Trader Daily

Tech Trader Daily is a blog on technology investing written by Barron’s veteran Tiernan Ray. The blog provides news, analysis and original reporting on events important to investors in software, hardware, the Internet, telecommunications and related fields. Comments and tips can be sent to: techtraderdaily@barrons.com.